Thai billionaire's Frasers Property makes second try to take REIT private, in $1 billion deal

By Sneha Kumar and Kumar Tanishk

(Reuters) -Thai business magnate Charoen Sirivadhanabhakdi's Frasers Property, on Wednesday, made a second attempt to take complete control of Frasers Hospitality Trust in a deal valuing the REIT at S$1.37 billion ($1.1 billion).

The billionaire's family and Frasers Property already own a little over 60% of the hospitality real estate investment trust's (REIT) units, and have offered S$0.71 for each unit they do not own.

The offer represents a 6.8% premium to the unit's closing price on Tuesday. The units' trading price jumped 4.5% on Wednesday to S$0.695, their highest since early September, 2022.

Frasers Property's first buyout attempt, made in 2022 and worth S$0.70 per share, failed to get shareholder support.

However, the Singapore-based developer's attempt is likely to succeed this time due to a compelling offer price, softening outlook of the hospitality sector and the REIT's small asset size, which limits its growth potential, said Vijay Natarajan, analyst at RHB Bank Singapore.

The REIT, which debuted on the Singapore Exchange in 2014, manages a portfolio of 14 hospitality assets—including hotels and serviced residences—across nine cities in Asia, Australia, and Europe.

Singapore's REIT sector has faced worries since the COVID-19 pandemic due to issues over rising interest rates, macroeconomic uncertainties and a weaker foreign exchange rate against the local dollar.

"Hospitality trusts are inherently exposed to more business volatility due to shorter stays and periodic capital expenditure for asset enhancement initiatives," the companies said.

Frasers Property said the REIT would remain constrained by both macroeconomic challenges and structural limitations, potentially hindering its ability to grow distributions per security (DPS) and net asset value (NAV).

($1 = 1.3012 Singapore dollars)

(Reporting by Sneha Kumar and Kumar Tanishk in Bengaluru; Editing by Mrigank Dhaniwala, Janane Venkatraman and Savio D'Souza)